How do you identify new opportunities and risks?

1 Scan your environment

One of the first steps to identify new opportunities and risks is to scan your external and internal environment. This means analyzing the factors that influence your business, such as market trends, customer preferences, competitors, regulations, suppliers, technology, and social issues. You can use tools like PESTEL, SWOT, and Porter's Five Forces to conduct a comprehensive environmental scan. By doing so, you can spot the strengths, weaknesses, opportunities, and threats that might impact your budget and forecast.

2 Assess your assumptions

Another step to identify new opportunities and risks is to assess your assumptions. Assumptions are the beliefs or expectations that you have about your business, such as sales growth, cost drivers, cash flow, and profitability. You need to test your assumptions regularly and update them based on the latest data and information. You can use tools like sensitivity analysis, scenario planning, and Monte Carlo simulation to evaluate how your assumptions affect your budget and forecast. By doing so, you can identify the best-case, worst-case, and most likely outcomes for your business.

3 Monitor your performance

A third step to identify new opportunities and risks is to monitor your performance. Performance monitoring is the process of measuring and comparing your actual results with your budget and forecast. You need to track your key performance indicators (KPIs), such as revenue, expenses, profit margin, and return on investment. You can use tools like dashboards, reports, and variance analysis to monitor your performance. By doing so, you can identify the gaps, trends, and anomalies that might indicate new opportunities or risks for your business.

4 Seek feedback and input

A fourth step to identify new opportunities and risks is to seek feedback and input. Feedback and input are the opinions and suggestions that you get from your stakeholders, such as customers, employees, partners, and investors. You need to solicit and listen to feedback and input regularly and incorporate them into your budget and forecast. You can use tools like surveys, interviews, focus groups, and brainstorming sessions to seek feedback and input. By doing so, you can identify the needs, preferences, and expectations of your stakeholders and how they might affect your business.

5 Learn and adapt

A fifth step to identify new opportunities and risks is to learn and adapt. Learning and adapting are the actions that you take to improve your budget and forecast based on your findings from the previous steps. You need to review and revise your budget and forecast periodically and make adjustments as needed. You can use tools like feedback loops, action plans, and change management to learn and adapt. By doing so, you can capitalize on the new opportunities and mitigate the new risks that you have identified for your business.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?